The End of Automotive: Accelerating digital transformation within mobility

There’s no doubt that digital is disrupting every industry. Yet, is it no longer dominated by the media or commerce sectors, as now it’s all about automotive. A century-old industry is shaken to its fundamentals. One single company is almost as valuable as the rest of the industry. Not because it produces more than all the others, rather the contrary: it’s located in the right place, works with the right people, and provides the best possible experience. For example, Tesla rocks the future of automotive. It’s not part of the steel industry, but a fashion product. It’s a high-tech company and an exponential scale up. Arguably, the Consumer Electronics Show (CES) has become the most prominent auto show in the world as the industry shifts from perceiving cars as simply a steel product and instead focuses on a service, and provides an experience, fueled with big data, AI, and other high tech.

The pressure is on as incumbent carmakers will continue to suffer if they are to ignore the changing behaviours of consumers. After all, it’s no secret that the population prefers younger and ‘cooler’ brands. Where the variety of brands and offerings available to the public is becoming overwhelming, the only way incumbents are able to cope with the pace and scope of change is by merging, collaborating and transforming.

Understanding the roadblocks for incumbents

Carmakers are faced with multiple challenges if they are to reinvent. Talent is an important battlefront for the cars of the future to be built by the next generation and therefore carmakers will have to be attractive for this. Gone are the days of wearing suits, steep hierarchies and even 9-5. Nowadays it is appealing to work in ‘cool’ and modern offices, wear T-shirts, and be part of agile teams, without any form of hierarchy. The cars of the future will be built by the next generation, with a fresh mindset and an opportunity not to be missed.

What’s more, the industry is hyper competitive. There is a real race for true high and deep tech in electrical power train, battery technologies, connectivity, autonomous driving, and also advanced materials and new manufacturing techniques. Success requires speed, curiosity, courage, and ingenuity. Not usually the traits of incumbents, but of tech start-ups.

Last but not least, another disruption is taking place. The mobile phone has turned us all into service subscribers. First, we started to consume connectivity services, then streaming services, like music or movies, and nowadays, anything as a service. From ride hailing to car sharing, the habits of ownership are changing. Everything turns into a service. As a result, the notion of ownership is gradually disappearing into a notion of service on demand, whenever you need, whatever you need. The next available best car is just a click away.

Various mega trends and incumbents impact all in all, the future of the automotive industry is far too slow to react to these. The future of automotive is not automotive at all, but it is mobility. All players need to start thinking in terms of services, ecosystems, and experiences. Services need to be personalised, comfortable, economic, and just beautiful. This is the new mobility reality, and it is already here. In this case, is there any chance to survive or compete for incumbents? Where transforming the main ship is close to impossible, there is another option: innovate and digital transform.

Repair and innovate with digital transformation

Carmakers and the whole ecosystem need to rethink and rewire. Current business models, product portfolios and value chains are obsolete. Time is against the incumbents, but in favour of the new breed of carmakers, more acting like tech start-ups.

The vehicle itself is in a digital transformation. It has transformed from a steel industry product to a high-tech industry service. The manufacturing of the vehicle will digitally transform as we see more clean production sites, managed from remote digital twins rather than industrial factories with thousands of workers.

The first step for a company within the automotive industry can accurately measure and benchmark its progress towards digital maturity. Regularly measuring progress allows the organisation to view the bigger picture and create a competitive advantage. It will understand where it is doing well and where it must improve. With that knowledge, a business within this turbulent industry can finally move in the right direction, closer to digital maturity and its competitors. Eventually, it will

Digital transformation is not an option, it’s a must. It’s not about if, but about what and how. Everybody else must align, adopt, or better disrupt, first themselves, and then the industry. After all, what is measured gets done. Ultimately a company that is on track with its digital transformation journey and making sure it’s progressing in the right direction will be on its way to find business success.